Quick Alert on RRC

[Jesse]

ATTN: Software Developers, Return Transmitters and Authorized IRS e-file
Providers/EROs:

Important message about computing the Recovery Rebate Credit

Key Message

The only way to avoid a delay in taxpayers' refunds is to put the correct
amount on the appropriate Recovery Rebate Credit line for Forms 1040, 1040A
or 1040EZ. Any other choice, either an incorrect amount, leaving the
Recovery Rebate Credit line blank or entering a zero (unless that is the
correct amount) will guarantee a refund delay.

Why?

During processing, the IRS compares the amount entered on line 70 (1040)
(line 42 for 1040A, line 9 for 1040EZ) to our records, if there is a match
the IRS processes the refund without delay. If the figures do not match,
the return is moved to a manual process in the IRS' error resolution
function during which time the correct RRC is computed and is then added (or
subtracted) from a taxpayer's refund or balance due.

How long is the delay?

At present, the manual process to compute the correct refund amount and
adjust the tax return is taking 1-2 days. The IRS has taken several steps
to ensure the minimum possible delay for refunds that end up in this manual
process. We anticipate that, even in high-volume periods, the maximum delay
as a result of an incorrect amount on line 70 (1040) (line 42 for 1040A,
line 9 for 1040EZ) will be less than a week.

How can taxpayers ensure they put the correct amount on line 70 (Form 1040)
(line 42 for Form 1040A, line 9 for Form 1040EZ)?

To ensure the reported amount for the recovery rebate credit is correct, the
taxpayer or preparer should use the IRS' application "How Much Was My
Stimulus Payment?" located on IRS.gov to compute the entry on line 70 (1040)
(line 42 for 1040A, line 9 for 1040EZ).

[JohnH]

I'm curious about the number of returns affected by the additional RRC. I haven't had one yet that is entitled to more credit, and I don't expect more than a handful. Anybody care to hazard a guess on how many taxpayers will actually be affected? 2%, 4%, 6%? Surely not more than 8% at most.

[Burke]

Not a one, yet.

[Larmil]

I'm curious about ht enumber of returns affected by the additional RRC. I haven't had one yet that is entitled to more credit, and I don't expect more than a handful. Anybody care to hazard a guess on how many taxpayers will actually be affected? 2%, 4%, 6%? Surely not more than 8% at most.

I have several so far that qualify for additional RRC. Unfortunately most of them was because their income dropped for 2007 to 2008. As for % it is about 4% of the returns I have seen so far.

[Mike Mac]

I would think it would be just the opposite regarding the change of income between the two years. I have had a couple of returns whose Stimulus rebate was limited to their 07 tax liability (due to low income) but they had higher 08 income and got a RRC.

[Larmil]

I would think it would be just the opposite regarding the change of income between the two years. I have had a couple of returns whose Stimulus rebate was limited to their 07 tax liability (due to low income) but they had higher 08 income and got a RRC.

I have had a couple of those also, but more limited on the high side. But, it is early in the season so who knows?

[ChEAr$]

the final irony

would be for a single fellow with insufficient income in 2007 to qualify even for the minimum
$300, but whose 2008 income exceeded the limit!

[wv112]

I've had quite a few. Most were for additional income on the '08 return, but I've had about 5 where a student went to work and had enough income to receive the $600, 2 only got $300. None were expecting it, and were very excited.

I've also had lots that would have got less if it was based on the '08 income.

[Jiggers]

One so far

I have had one with additional rebate. The IRS has held up his refund from 2/6 until 2/17, according to "Where is my Refund" website. This was an e-file with a direct deposit.

Client isn't too happy about that.

His income in 2007 limited his rebate. This year he had lower income and was entitled to it.

[David1980]

I have had one with additional rebate. The IRS has held up his refund from 2/6 until 2/17, according to "Where is my Refund" website. This was an e-file with a direct deposit.

Client isn't too happy about that.

His income in 2007 limited his rebate. This year he had lower income and was entitled to it.

See, the IRS is not giving consistent information here. Assuming you had the right number on there (and I'm sure you did) there shouldn't have been a delay at all per IRS. Even if you had the wrong amount they say it's a week at most with most of them only delayed a couple days.

So what happened? 17 - 6 is not 2 days nor is it just 1 week. And that's when you get the amount right? Someone there (at the IRS) really didn't think this RRC thing through...

[Koss]

Rebate Recovery Credit

I've had several already, including one where the taxpayer was claimed as a dependent on the 2007 tax return, but not on the 2008 return.

And another in which the couple was MFS for 2007, and put both kids on his return...

So for 2008, they were MFS again, and put both kids on her return.

Yes, this really works. On the stimulus check, he was effectively overpaid, since the two kids that appear on his 2007 return are not on his 2008 return. For the RRC, she picks up the two kids, since they were not on her 2007 return.

Obviously, this only works if certain other pieces of the puzzle fall into place, and it makes a big difference which state you're in, too.

Textbook example of the law of unintended consequences...

BMK

[JohnH]

I looked over several returns I've already filed, none of whom are entitled to the RRC, and I noticed that the RRC line is blank. According to the memo, even that will delay the refund while they process it. Seems like IRS is drumming up excuses to do additional processing of the return & create delay, since we are not required to put zeros on other lines which don't apply.

For me this isn't a big deal since all are paper filed, but just to be on the safe side I'll enter the zero on all future returns which don't qualify.

[BP.]

Havve had lots of RRC already --- variety of reasons --- one big reason is new babies in '08.

[joanmcq]

Oh crap, I just sent my roommate's return off, and then remembered this **** credit. she got the minimum last year but had a bit more income, so this year she gets another 136. Sigh, I guess her refund'll be delayed.